Face to Face with Financial Capability
In this blog, Richard takes us through a recent client story that really puts financial capability through its paces & highlights that many outcomes make light work of indebtedness.
Life Shocks
The alcohol dependency had crept up on the client after her husband died 2 years ago. Coping with bereavement & developing an alcohol problem left the client with problems managing her unsecured debt. The client owns her home outright & has non-dependent daughters living with her.
Drop-in Information & Signposting
The generalist adviser ran a benefit check & the client was given information on claiming Job Seekers Allowance (JSA) & other related benefits. The client was also advised about the possibility of a JSA sanction due to her dismissal & the need for her to state factors that led up to the dismissal to mitigate this. She was signposted to
Cruse Bereavement.A follow up full fact find appointment with a debt specialist was arranged.1 Week Later - The Debt Advice Fact Find!
A specialist appointment with Richard had been booked to look at the client's individual circumstances in more detail & to discuss the pros & cons to eligible options.
The client missed the 1st appointment & rearranged. When she attended the next appointment she had been able to get another job.
The client was then helped to draw up an accurate income & expenditure sheet, which showed that the client had a deficit after debt repayments of +£25.09 pcm before debts (-£241.05 pcm after debts)
Debt options were explored, but there weren’t any that were suitable at this time that the client wanted to do. The client said that she was prepared to make cuts to her expenditure, if required, in order to pay off her debts.Income Maximisation
Richard suggested that she should ask her non-dependent daughters to contribute more, an extra £50 per month extra each was agreed. (Total of £100 pcm).
Budgeting Advice
The client was helped to switch her energy (Saving £229 annually)
The client could spread her council tax over 12 months instead of 10 months (lower monthly payments by £21.50 pcm)
The client could save by installing a water meter (saving £184 annually)
After all the actions had taken place & agreed expenditure cuts had been implemented the client had a surplus spare income of +£249.86 pcm before debt repayments (+£10.21 pcm after debt repayments)Empowerment
The client was assisted to reactivate her online credit report, so she could check her credit score and receive monthly updates on her status, to guard against any fraud & she could keep a handle on her accounts that were open and closed.
Debts Re-organisation
The client was advised about performing a balance transfer to a new credit card at 0% interest, for 36 months, to amalgamate the two store cards & smallest credit card debt (totalling £3017), therefore saving a high amount of interest payments. This application was successful, a Direct Debit was set up for £83 pcm, which will clear this debt within the 36 months. The client's credit card was destroyed with the client during the appointment, so that there was no further spending on this.
The larger debt of over £8200 was on another credit card. Our adviser spoke with the credit card company & negotiated with them that they would spread the debt over 5 years, at an agreed 3% interest rate and an affordable monthly amount, which would pay this card off in full within the 5 years.
Building Financial Resilience
Cambridge Citizens Advice worked with the client to help her to set up “set aside” accounts for her online banking, so that she is putting money aside for things such as: clothing, emergencies, car repairs etc, in order to build her resilience (8 in total so far).
Financial Stability
The client is in employment, is regularly attending Alcoholics Anonymous meetings for help with her alcohol dependency, her debts are under control & she is paying affordable amounts to have all her debts paid off in the next 4 years. Also she's building resilience for the coming months & years, by adopting a save first- spend later approach. The client says she feels in control of her life!
Financial Stability
Out thanks to Richard & Cambridge Citizens Advice for sharing this client story. It's certainly a great example of how valuable local Citizens Advice is in the community, & it highlights the breadth & specialism of service provided by them - free to the community.
